1 00:00:13,05 --> 00:00:16,60 They say when you talk that way that we sort of start with 2 00:00:16,61 --> 00:00:20,50 a joke or if you're not funny never start with 3 00:00:20,51 --> 00:00:27,35 a joke because it just gets awkward So what I'm going to do is start with the story 4 00:00:27,81 --> 00:00:34,67 that President Herbert Hoover recounted in his memoirs. About his 5 00:00:34,68 --> 00:00:39,14 last day as president of the United States which was on March fourth one nine 6 00:00:39,15 --> 00:00:44,98 hundred thirty three now President Hoover used to get his in our cabinet together 7 00:00:44,99 --> 00:00:47,58 his friends and he have this like one hour once 8 00:00:47,59 --> 00:00:50,92 a week where they weren't allowed to talk politics they weren't allowed to do any 9 00:00:50,93 --> 00:00:57,21 business of the country they just basically hung out and sort of chatted now course 10 00:00:57,22 --> 00:01:00,52 Herbert Hoover is very dejected at the end of his presidency the countries in the 11 00:01:00,53 --> 00:01:06,12 middle the Great Depression twenty five percent unemployment foreclosures up people 12 00:01:06,13 --> 00:01:11,19 out of their businesses their homes their jobs and it all started so well for him 13 00:01:11,20 --> 00:01:15,09 in one thousand twenty eight when he came into office so on his last day his 14 00:01:15,15 --> 00:01:20,30 secretary of state hide recounts this tale he says there are these two bankers and 15 00:01:20,31 --> 00:01:25,50 I tell you the story about them one of these bankers is walking on the street he's 16 00:01:25,51 --> 00:01:30,69 jobless he's unshaven he's tired he's hungry and it comes upon the circus manager 17 00:01:30,84 --> 00:01:34,51 at the circus and he says I just I just want to square meal if there's anything you 18 00:01:34,52 --> 00:01:37,96 can do I just want a little bit to eat I'm dying here and 19 00:01:37,97 --> 00:01:42,31 a circus manager says I can't help you I can't even feed my own employees I had to 20 00:01:42,32 --> 00:01:47,37 kill the lion to feed the Tigers I got nothing and at that moment one of the 21 00:01:47,38 --> 00:01:52,03 employees comes up to the circus manager he says the girl is dead he starts his gun 22 00:01:52,69 --> 00:01:56,01 at which point the circus manager throws up his hands in desperation says that's it 23 00:01:56,02 --> 00:02:00,21 I'm finished and the enterprising young banker jumps in front of me says you know 24 00:02:00,22 --> 00:02:06,16 when I got an idea. Let's skin the gorilla I'll get in the gorilla suit I'll get in 25 00:02:06,17 --> 00:02:09,38 the cage and I'll perform for a square meal and 26 00:02:09,56 --> 00:02:14,02 a cut of the profits so circus America says OK fine I've got nothing to lose so the 27 00:02:14,03 --> 00:02:17,39 banker puts on the gorilla suit he gets in the cage he starts performing like 28 00:02:17,40 --> 00:02:18,49 a gorilla and all of 29 00:02:18,50 --> 00:02:21,79 a sudden the lion in the cage next to him opens up the bars and makes for him 30 00:02:21,80 --> 00:02:27,35 ferociously in the bank or jumps back in in absolute fear and the Lion says Shut up 31 00:02:27,36 --> 00:02:29,19 you think the only banker of 32 00:02:29,20 --> 00:02:35,34 a job. And this was something that 33 00:02:36,82 --> 00:02:41,28 Herbert Hoover remembered enough to recount in his memoirs it's also in the book in 34 00:02:41,30 --> 00:02:47,65 case you want to learn it and tell it to your friends. When I was here actually 35 00:02:47,66 --> 00:02:49,56 a couple years ago it was to talk about 36 00:02:49,57 --> 00:02:53,88 a novel I had written called Black Tuesday which was the recount of 37 00:02:53,97 --> 00:02:58,19 a fictionalized romanticized version of the crash of one nine hundred twenty nine 38 00:02:58,77 --> 00:03:02,82 and really by researching that book I came upon the idea for this book for all the 39 00:03:02,83 --> 00:03:04,32 presidents bankers because there was 40 00:03:04,33 --> 00:03:09,40 a scene in the book that happened where in six bankers the big six bankers of the 41 00:03:09,41 --> 00:03:14,86 time got together at noon on Thursday October twenty fourth of the stock market is 42 00:03:14,87 --> 00:03:19,81 plummeting and they they gathered at the house of Morgan at the bequest of Thomas 43 00:03:19,82 --> 00:03:20,97 Lamont he was 44 00:03:20,98 --> 00:03:24,24 a fellow who is the acting chairman of Morgan at the time because Jack Morgan 45 00:03:24,25 --> 00:03:27,97 generally was never around who was the actual chairman of Morgan he was off 46 00:03:28,01 --> 00:03:31,77 travelling in Europe as he tended to do while the everything was falling apart and 47 00:03:31,78 --> 00:03:35,64 Tom Lamont got together five other bankers that represented banks across the city 48 00:03:35,65 --> 00:03:39,65 and really that represent most powerful bankers at the time the six spankers as 49 00:03:39,66 --> 00:03:44,01 they were called and in twenty minutes they all decided to pony up twenty five 50 00:03:44,02 --> 00:03:46,98 million dollars to save the markets the reason they wanted to save the markets was 51 00:03:46,99 --> 00:03:50,04 not because they care that people were out in the streets panicking but they had 52 00:03:50,05 --> 00:03:52,36 money invested in these markets and they wanted to figure out 53 00:03:52,37 --> 00:03:56,25 a way to prop them up long enough to have things settle out and to go forward and 54 00:03:56,26 --> 00:04:01,20 be fine and after twenty minutes they come out reporters are all over the house and 55 00:04:01,21 --> 00:04:05,61 Morgan Two of the people from Morgan Lamont and Richard Whitney who later became 56 00:04:05,62 --> 00:04:08,85 the head of the New York Stock Exchange go out the back door of Morgan which 57 00:04:08,86 --> 00:04:12,09 downtown in Manhattan is literally it's like basically from here to the back of 58 00:04:12,10 --> 00:04:15,40 this room to get to the New York Stock Exchange the back door of the New York Stock 59 00:04:15,41 --> 00:04:18,88 Exchange and he goes in Richard when he starts buying up shares of U.S. 60 00:04:18,89 --> 00:04:21,58 Steel which is one of the Morgan and surprises and 61 00:04:21,59 --> 00:04:24,98 a number of other things and this lifts the market at least the stories in the 62 00:04:24,99 --> 00:04:28,91 press and New York Times is all in throwing about how once again the Morgan Bank 63 00:04:28,92 --> 00:04:33,95 has saved the country the world Wall Street the whole thing Herbert Hoover in 64 00:04:33,96 --> 00:04:36,52 Washington breeze a sigh of relief he thinks he's going to go for 65 00:04:36,53 --> 00:04:41,94 a second term and then of course everything goes haywire but when I looked at those 66 00:04:41,95 --> 00:04:46,10 big thick spanker something kind of clicked in my head which is that we have. Big 67 00:04:46,11 --> 00:04:48,39 Six set of banks today six is 68 00:04:48,40 --> 00:04:54,25 a common number and financial history and those big six packs that were in that 69 00:04:54,26 --> 00:04:54,63 room 70 00:04:55,22 --> 00:05:00,52 a nine hundred twenty nine represented the Morgan Bank which became today part of 71 00:05:00,53 --> 00:05:03,91 J.P. Morgan Chase the Chase Bank which is part of J.P. 72 00:05:03,92 --> 00:05:09,72 Morgan Chase National Citi Bank and First National Bank both of which are now part 73 00:05:09,73 --> 00:05:14,67 of Citi Group Bankers Trust which at the time was the constellation of Morgan and 74 00:05:14,68 --> 00:05:20,19 they still exist today they're not one of the big six but they survived. And 75 00:05:21,62 --> 00:05:25,41 the fact that there were sixty now and six then there's different ones today 76 00:05:25,42 --> 00:05:25,56 there's 77 00:05:25,57 --> 00:05:29,22 a couple more in there Morgan Stanley is one of the big six they actually spun off 78 00:05:29,23 --> 00:05:33,96 of the Morgan Bank in one nine hundred thirty four and we also have Bank of America 79 00:05:33,97 --> 00:05:38,29 and Wells Fargo but they sort of coming in later but the sixpence that were in that 80 00:05:38,30 --> 00:05:42,38 room six bankers that represent them their legacy has lived on but going backward 81 00:05:42,39 --> 00:05:48,22 in time they also lived before. In particular the Morgan Bank in particular J.P. 82 00:05:48,23 --> 00:05:52,68 Morgan who had been the most powerful financier the country's ever known and and 83 00:05:52,69 --> 00:05:58,77 the most astute political financial power behind the presidency who really 84 00:05:58,88 --> 00:06:03,04 created in His time when he was running the Morgan Bank 85 00:06:03,22 --> 00:06:07,68 a path that really informs what we what happens today between political financial 86 00:06:07,69 --> 00:06:11,35 alliances and it started in the Panic of one thousand and seven actually so before 87 00:06:11,36 --> 00:06:14,07 the panic in one thousand and seven but my book starts near the Panic of one 88 00:06:14,08 --> 00:06:17,35 thousand and seven in which. There was 89 00:06:17,36 --> 00:06:22,48 a common occurrence going on there had been speculation gone wrong and as 90 00:06:22,49 --> 00:06:26,70 a result of particular bank it was called the Knickerbocker trust company was going 91 00:06:26,71 --> 00:06:30,25 under the reason it was going under was because depositors were freaking out 92 00:06:30,26 --> 00:06:34,35 because their money was in this bank and it had been discovered that some of the 93 00:06:34,36 --> 00:06:35,57 leaders of this bank had made 94 00:06:35,58 --> 00:06:39,01 a really bad bets and copper there tried to rig the copper market so this idea 95 00:06:39,02 --> 00:06:42,51 rigging markets nothing new no no you know Michael Lewis did the high frequency 96 00:06:42,52 --> 00:06:45,34 thing but really the rigging of the markets has been something that has happened 97 00:06:45,88 --> 00:06:47,39 for more than 98 00:06:47,40 --> 00:06:53,01 a century but this particular moment started an entire are of historical events 99 00:06:53,02 --> 00:06:57,40 that really gets us to where we are today because Teddy Roosevelt who was the 100 00:06:57,41 --> 00:07:00,50 president at the time he was friends with J.P. 101 00:07:00,51 --> 00:07:05,12 Morgan they were the same social class their families hung out they knew each other 102 00:07:05,13 --> 00:07:09,13 they trusted each other they had close personal connections and Teddy Roosevelt 103 00:07:09,14 --> 00:07:11,95 even though he came to power as this big trust buster and 104 00:07:11,96 --> 00:07:17,35 a progressive president and all of that he never busted the banks and on that day 105 00:07:17,39 --> 00:07:20,95 in October when the Tober again in one thousand nine hundred seven when the 106 00:07:20,96 --> 00:07:24,63 Knickerbocker Trust Company was falling apart when there were people from Fifth 107 00:07:24,64 --> 00:07:28,19 Avenue to Harlem the rich the poor were all trying to get their money out of this 108 00:07:28,20 --> 00:07:30,16 bank in there with panic in the streets there was 109 00:07:30,27 --> 00:07:33,86 a policeman with clubs beating these people back things were going haywire Teddy 110 00:07:33,87 --> 00:07:38,47 Roosevelt was scared about his next presidency he had not yet announced that he 111 00:07:38,48 --> 00:07:42,11 wasn't going to run and nobody wanted to have no president wants to have an economy 112 00:07:42,12 --> 00:07:44,43 tank on their watch so he says to J.P. 113 00:07:44,44 --> 00:07:49,47 Morgan You take care of it and for the first time in U.S. 114 00:07:49,48 --> 00:07:54,99 History he asked the Treasury Department to give money to 115 00:07:55,03 --> 00:08:00,16 a private banker to help to bail out the situation and the Treasury Department 116 00:08:00,17 --> 00:08:04,44 announced they would give twenty five million dollars to Morgan for him to decide 117 00:08:04,45 --> 00:08:08,83 what to do with to save the situation and in addition because that wasn't enough. 118 00:08:09,68 --> 00:08:14,05 Morgan gathered some of his friends together one of them was James Stillman who was 119 00:08:14,06 --> 00:08:14,31 the head 120 00:08:14,32 --> 00:08:18,47 a National City Bank at the time and the National City Bank in the Stillman's of 121 00:08:18,48 --> 00:08:21,87 the Morgans in general are very closely connected the families were very closely 122 00:08:21,88 --> 00:08:26,83 connected and he also asked some other his of his people including Thomas Lamont 123 00:08:26,84 --> 00:08:31,02 who I just mentioned was the chairman later in one thousand twenty nine by the 124 00:08:31,03 --> 00:08:33,55 acting chairman of the Morgan Bank So again 125 00:08:33,56 --> 00:08:36,93 a tie that will go back for more than two decades and these months in 126 00:08:36,94 --> 00:08:37,67 a room and J.P. 127 00:08:37,68 --> 00:08:40,97 Morgan just says you're all going to put in some money I want to find extra money 128 00:08:40,98 --> 00:08:43,97 we're going to save the situation here because we just can't have this continuing 129 00:08:44,08 --> 00:08:48,08 he can't put any of his own money it in fact he asked James Stillman to ask the 130 00:08:48,09 --> 00:08:52,30 Rockefeller's who ran Standard Oil Trust if they could sell some shares so they 131 00:08:52,31 --> 00:08:56,24 could get oil money so they could pay to have some of these banks saved but he took 132 00:08:56,25 --> 00:09:00,28 the credit for it and he also never save the Knickerbocker Trust Company he didn't 133 00:09:00,29 --> 00:09:03,51 have friends of the Knickerbocker Trust Company there were no daughters married to 134 00:09:03,52 --> 00:09:07,91 sons working at the top of the Knickerbocker Trust Company he decided to save the 135 00:09:07,92 --> 00:09:13,48 Trust Company of America and by saving the Trust Company of America in which he had 136 00:09:13,49 --> 00:09:17,81 personal ties in which he had interest in which his associates who were running 137 00:09:17,82 --> 00:09:24,23 other financial services around the city also had interest and he was allowed it 138 00:09:24,56 --> 00:09:26,17 as a king literally 139 00:09:26,18 --> 00:09:30,79 a king by the New York Times for saving the country this was in one thousand and 140 00:09:30,80 --> 00:09:35,87 seven. He didn't use his own money he opened the Treasury Department for the first 141 00:09:35,88 --> 00:09:41,08 time ever and it got Teddy Roosevelt to never get in the way again of any of the 142 00:09:41,09 --> 00:09:46,02 banks and that the idea that banks could not be trust busted and that this 143 00:09:46,03 --> 00:09:51,72 political financial power could be used so behind the scenes in such 144 00:09:51,73 --> 00:09:57,68 a Ultimately public fashion really started back then and so what happened was after 145 00:09:57,69 --> 00:09:59,09 he was allowed it J.P. 146 00:09:59,10 --> 00:10:04,85 Morgan decided you know what this cannot stand we need to have another form of 147 00:10:04,89 --> 00:10:09,38 money making so that I don't have to get my friends together at night in my library 148 00:10:09,57 --> 00:10:12,70 or get money from the Treasury Department that part's actually OK but we have 149 00:10:12,71 --> 00:10:18,99 a central bank. Which became the Federal Reserve which which will back us and the 150 00:10:19,00 --> 00:10:22,21 stories behind the start of the Federal Reserve have 151 00:10:22,22 --> 00:10:25,37 a lot of conspiracy stuff attached to them but what I did is actually went to 152 00:10:25,38 --> 00:10:31,78 Jackal Island which was the birthplace of the meeting that spawned the Federal 153 00:10:31,79 --> 00:10:34,30 Reserve in one nine hundred ten and I looked at 154 00:10:34,31 --> 00:10:39,54 a lot of the records there which are not open even yet there's the Jekyll Island 155 00:10:39,55 --> 00:10:40,02 Club which is 156 00:10:40,03 --> 00:10:43,39 a very elite club and was back then you could only gain access to it if you were 157 00:10:43,40 --> 00:10:46,02 a member or if you were sponsored by a member if you were the guest of 158 00:10:46,03 --> 00:10:49,47 a member today is a hotel resort but they have 159 00:10:49,48 --> 00:10:53,17 a lot of the photos from back then and there is room full of old documents that are 160 00:10:53,18 --> 00:10:55,60 still being collected and there is 161 00:10:55,61 --> 00:10:58,90 a there's an archivist there who I work with to look at some of the information and 162 00:10:58,91 --> 00:11:00,76 what happened was J.P. 163 00:11:00,77 --> 00:11:05,43 Morgan was not at the meeting which we all know or I'm telling you but some of you 164 00:11:05,44 --> 00:11:12,30 wrote it but he sponsored the six people again it was six that went to 165 00:11:12,31 --> 00:11:16,64 Jekyll Island to discuss the foundation of the Federal Reserve and the reason that 166 00:11:16,97 --> 00:11:21,02 that even happened was because he was afraid of the panic and because once Teddy 167 00:11:21,03 --> 00:11:26,34 Roosevelt's administration was over and Taft came into power Taft also was afraid 168 00:11:26,35 --> 00:11:29,27 there could be another panic but there were some there was another reason that the 169 00:11:29,28 --> 00:11:31,37 Federal Reserve was created that doesn't get discussed 170 00:11:31,38 --> 00:11:35,60 a lot. In history books and that is that America itself was at its cost roads of 171 00:11:35,61 --> 00:11:40,17 power America was looking at the world and saying we need central bank to be more 172 00:11:40,42 --> 00:11:44,98 competitive with England we need central banks and credit competitive with France 173 00:11:45,04 --> 00:11:45,47 and we'd have 174 00:11:45,48 --> 00:11:48,92 a unified currency because at the time banks were all issuing their own notes and 175 00:11:48,93 --> 00:11:54,23 you could go on basically get notes back by individual banks and so one bank failed 176 00:11:54,48 --> 00:11:56,29 all of their notes failed and it had 177 00:11:56,30 --> 00:12:00,32 a big negative effect on everything else and so this idea was that if you had one 178 00:12:00,33 --> 00:12:05,02 consolidated place that issued Federal Reserve Notes issue currency as well that 179 00:12:05,03 --> 00:12:08,60 that would strengthen this idea and sort of unify this whole process and that was 180 00:12:08,61 --> 00:12:09,29 something that J.P. 181 00:12:09,30 --> 00:12:12,66 Morgan was interested in it was also something that President Taft was interested 182 00:12:12,67 --> 00:12:13,79 in and it was something that 183 00:12:13,80 --> 00:12:18,17 a man named that named Senator Nelson Algren was interested in he was the senior 184 00:12:18,18 --> 00:12:21,87 senator from Rhode Island and he ran the Senate Finance Committee at the time the 185 00:12:21,88 --> 00:12:27,19 Senate Banking Committee at the time. He is we're friends with the Morgans they 186 00:12:27,20 --> 00:12:31,71 were friends with the Stillman's in fact for two years from one thousand eight to 187 00:12:31,72 --> 00:12:38,41 nineteen ten after the panic Nelson Al Drish hung out in Europe with James Stillman 188 00:12:38,46 --> 00:12:42,34 who was one of the guys who was at the library meeting with Morgan and Han James 189 00:12:42,35 --> 00:12:46,09 Stillman sort of travel around talk to people sent reams of paper back to 190 00:12:46,10 --> 00:12:50,80 Washington to show them what the plans were for the central banks and how to be 191 00:12:50,81 --> 00:12:54,07 like Europe but not like Europe how to be more in the interest of the private banks 192 00:12:54,08 --> 00:12:56,03 but also be like Europe from the standpoint of creating 193 00:12:56,04 --> 00:12:59,90 a currency and being sort of globalized in the world so in one nine hundred ten 194 00:12:59,91 --> 00:13:02,11 Nelson Eldritch hadn't though formalized 195 00:13:02,34 --> 00:13:07,34 a plan and Taft really wanted to have one passed under his term and so he went to 196 00:13:07,35 --> 00:13:11,45 Jekyll Island but that wasn't also going to happen what happened was Nelson elders 197 00:13:11,46 --> 00:13:16,65 first came to New York and in New York when he was visiting his son Winthrop 198 00:13:16,69 --> 00:13:22,78 Eldritch who I will talk about as well later but Winthrop Alger's also is the great 199 00:13:22,82 --> 00:13:24,85 uncle of David Rockefeller was 200 00:13:24,86 --> 00:13:28,97 a name you guys know and now also Rockefeller who was 201 00:13:29,01 --> 00:13:32,96 a four time governor of New York and vice president of United States decades later 202 00:13:33,58 --> 00:13:38,60 Nelson Eldridge goes to Winthrop Eldridge his house because he wants to discuss 203 00:13:38,61 --> 00:13:40,82 this matter and he gets hit by 204 00:13:40,86 --> 00:13:46,60 a trolley car I'm out of an avenue in New York. And convalescing analogise house 205 00:13:46,83 --> 00:13:51,36 Morgan is like you have to kind of continue this process you have to do something 206 00:13:51,37 --> 00:13:53,81 in altitude one to go back to his a state in Rhode Island he was 207 00:13:53,82 --> 00:13:59,60 a very rich man but Morgan convinced him to go to Jackal island on his guest ship 208 00:13:59,64 --> 00:14:03,62 so he basically said I will open this place for you take whoever you need and go 209 00:14:03,66 --> 00:14:03,94 J.P. 210 00:14:03,95 --> 00:14:07,06 Morgan did not go and that's kind of the thing about power you don't have to be there 211 00:14:07,07 --> 00:14:10,95 you just have to sort of maneuver behind the scenes and what he did was he opened 212 00:14:11,15 --> 00:14:13,99 this island for them and I went and I went down there that right now there's 213 00:14:14,00 --> 00:14:17,91 a causeway leading to the sort of area that's off the coast and has all these dunes 214 00:14:17,92 --> 00:14:20,89 and stuff next to it but at the time the only way you could get in was through 215 00:14:20,90 --> 00:14:26,17 a yacht and there was sort of people at the edge of the water and the whole town 216 00:14:26,18 --> 00:14:29,31 was alerted that you can even use their own boats to go anywhere near this island 217 00:14:29,32 --> 00:14:29,70 and so there was 218 00:14:29,71 --> 00:14:33,82 a low an alert that went out these people came they got together one of them was 219 00:14:33,83 --> 00:14:39,25 Frank Fandor Lipp who was the. Vice President of National City Bank and 220 00:14:39,29 --> 00:14:42,41 a protege of James Stillman so Stillman was represent 221 00:14:42,42 --> 00:14:45,05 a National City Bank was represented but everybody else there was really 222 00:14:45,06 --> 00:14:49,76 represented from the Morgan Bank and so that's kind of what happened they came back 223 00:14:49,77 --> 00:14:54,80 Nelson was still sick because of the whole trolley car thing and so he can't go 224 00:14:54,81 --> 00:14:59,79 back up to Washington. So who goes to Washington to present the plan they've just 225 00:14:59,80 --> 00:15:05,21 created but Frank Vanderlip from Citibank national Citibank and who Davidson who 226 00:15:05,26 --> 00:15:09,29 became later one of the board members of the Federal Reserve So those are the two 227 00:15:09,30 --> 00:15:13,32 guys that actually presented the plan that became the Federal Reserve they also 228 00:15:13,33 --> 00:15:17,55 happened to be friends with Woodrow Wilson who became president after Taft and who 229 00:15:17,56 --> 00:15:20,97 ultimately signed the Federal Reserve back in December of one nine hundred thirteen 230 00:15:21,22 --> 00:15:21,42 there was 231 00:15:21,43 --> 00:15:25,36 a lot of sort of political back and forth going on between when Taft left and 232 00:15:25,37 --> 00:15:30,35 Wilson came in Wilson campaigned against the bankers he campaigned against this 233 00:15:30,36 --> 00:15:34,08 concentration of wealth in these money trusts but he was friends with these people 234 00:15:34,09 --> 00:15:38,81 him and Frank Vanderlip used to hang out evangelists house in upstate New York and 235 00:15:38,82 --> 00:15:43,94 talk about events of the day when Woodrow Wilson was still president of Princeton 236 00:15:43,95 --> 00:15:48,59 University Junius Morgan who was the father of J.P. 237 00:15:48,60 --> 00:15:53,14 Morgan used to donate money to Wilson when he was looking for money to run 238 00:15:53,15 --> 00:15:57,18 Princeton University so the tie was pretty tight so so when he was talking against 239 00:15:57,19 --> 00:16:00,17 the money trust never actually mentioned any of them by name but he did get elected 240 00:16:00,18 --> 00:16:00,50 on being 241 00:16:00,51 --> 00:16:06,91 a populist president and he did sign the Federal Reserve Act and he also took the 242 00:16:06,92 --> 00:16:11,40 country into World War One the person that was by his side in terms of helping to 243 00:16:11,41 --> 00:16:15,83 finance World War One was Jack Morgan the son of J.P. 244 00:16:15,84 --> 00:16:20,00 Morgan after a year of being in office a year and 245 00:16:20,01 --> 00:16:26,48 a bit as war was starting to break out in Europe. Woodrow Wilson called 246 00:16:26,86 --> 00:16:32,23 Jack Morgan to the White House. And again the press was all abuzz about this there 247 00:16:32,24 --> 00:16:36,12 were reporters there there were flashes there like why is Jack Morgan at the White 248 00:16:36,13 --> 00:16:41,12 House I thought that we thought that the country thought that he and Wilson are 249 00:16:41,13 --> 00:16:46,08 sort of on different pages and after this meeting which was at noon in the middle 250 00:16:46,09 --> 00:16:49,78 of the summer nine hundred fourteen Jack Morgan comes out Jack is 251 00:16:49,79 --> 00:16:53,49 a really private guy so he doesn't talk to the press in fact he just tells the 252 00:16:53,50 --> 00:16:59,73 press talk to talk to Wilson. Leaving Woodrow Wilson then gets asked by the press 253 00:16:59,74 --> 00:17:05,64 why was why was Morgan here and all Woodrow Wilson says is he was here at my 254 00:17:05,65 --> 00:17:12,63 pleasure and what it turned out was through World War One the Morgan bank 255 00:17:12,67 --> 00:17:19,00 finance seventy five percent of all war related 256 00:17:19,09 --> 00:17:23,89 financings and this wasn't I don't know that I found out that number from this 257 00:17:23,90 --> 00:17:29,49 little report that went to Woodrow Wilson in one of his letters. It was all it was 258 00:17:30,42 --> 00:17:34,04 a large percentage and it wasn't so much that he was doing it separate from the 259 00:17:34,05 --> 00:17:35,34 White House and that's 260 00:17:35,35 --> 00:17:38,49 a lot of the point of my book is that these alliances aren't something that the 261 00:17:38,50 --> 00:17:41,32 bankers are imposing on the presidents there is a there's 262 00:17:41,33 --> 00:17:46,42 a mutually reinforcing collaboration that allows both of them to maintain powers in 263 00:17:46,43 --> 00:17:51,58 their separate or interceptor orbits between politics and finance but they really 264 00:17:51,59 --> 00:17:56,13 do work together and back in the in the earlier part of the twentieth century they 265 00:17:56,14 --> 00:17:59,55 were they hung out together they went to school together they were engaged in 266 00:17:59,56 --> 00:18:03,03 social activities together they liked each other they trust each other they ran 267 00:18:03,04 --> 00:18:09,57 things together one was elected. And one wasn't and that's also where some of the 268 00:18:09,58 --> 00:18:14,54 democracy starts to break down because we elect the president we don't elect these 269 00:18:14,55 --> 00:18:19,58 bankers and yet the influence tends to be pretty equal and so that really really 270 00:18:19,59 --> 00:18:20,100 eats away at what we have 271 00:18:21,01 --> 00:18:24,00 a democracy whether or not they make good decisions together or bad decision 272 00:18:24,01 --> 00:18:27,33 together whether or not it helps the population or in many cases hurts the 273 00:18:27,34 --> 00:18:33,02 population but for World War One the Treasury Department Wilson were all on board 274 00:18:33,03 --> 00:18:38,71 with having Morgan take care of financing he instructed other banks where they 275 00:18:38,72 --> 00:18:44,26 would place funds he was working with increasing the level of war bonds that were 276 00:18:44,27 --> 00:18:47,76 sold through individuals to help finance the war he was involved in 277 00:18:47,77 --> 00:18:51,38 a lot as were his partners at National City Bank in 278 00:18:51,39 --> 00:18:55,60 a chase but mostly orchestrated by the Morgan Bank and this is one of the reasons 279 00:18:55,61 --> 00:19:01,14 why the Morgan Bank was so influential in World War One and also into World War two 280 00:19:01,67 --> 00:19:08,55 Now back to Tom Lamont. He went with Wilson after the war to 281 00:19:08,56 --> 00:19:11,14 help negotiate the Treaty of Versailles is not 282 00:19:11,15 --> 00:19:15,05 a name that comes up in talking about the treaty oversight which was basically how 283 00:19:15,31 --> 00:19:21,68 reparations after the war would be paid to the allied countries from the aggression 284 00:19:21,69 --> 00:19:28,67 countries as they were called and Lamont was he left his job for months Wilson 285 00:19:28,68 --> 00:19:32,88 was on the road on the road in he was the first sitting president to ever travel 286 00:19:32,89 --> 00:19:34,68 overseas to ever be out of U.S. 287 00:19:34,69 --> 00:19:37,92 Soil and he was there for quite some time because he really wanted to get this 288 00:19:37,93 --> 00:19:42,21 right and Lamont was working on the financial side so he was kind of there into 289 00:19:42,22 --> 00:19:46,31 capacities one was tell me helping Wilson one was negotiating with England and 290 00:19:46,32 --> 00:19:49,40 France because they wanted more reparations and Germany wanted to pay less and all 291 00:19:49,41 --> 00:19:52,88 sorts of other things were going on and the other was just traipsing around Europe 292 00:19:52,89 --> 00:19:58,15 trying to assess the situation from an economic standpoint for opportunities as 293 00:19:58,16 --> 00:20:02,65 well as to help people. I'm so he was kind of doing both things and when they came 294 00:20:02,66 --> 00:20:07,41 back to the United States after the treaty was signed Woodrow Wilson crossed for 295 00:20:07,42 --> 00:20:11,66 something called the League of Nations which was to be me or like the United 296 00:20:11,67 --> 00:20:15,28 Nations ultimately became one which would have all these countries agree that they 297 00:20:15,29 --> 00:20:17,89 would work together and have sort of 298 00:20:17,90 --> 00:20:21,27 a lasting formalized peaceful that didn't get passed by Congress they don't like 299 00:20:21,28 --> 00:20:27,24 that idea at the time they they mostly wanted to retrace retread back from having 300 00:20:27,25 --> 00:20:31,01 to deal with anything internationally become very much more isolated from the 301 00:20:31,02 --> 00:20:35,79 standpoint of politics of trade economics everything in fact Frans van Frank 302 00:20:35,80 --> 00:20:39,52 Vanderlip I mentioned before is one of the guys who have presented the Federal 303 00:20:39,53 --> 00:20:44,30 Reserve plan in Washington he had become disillusioned with Wilson in general he 304 00:20:44,31 --> 00:20:47,92 was actually campaigning against the League of Nations because he was annoyed that 305 00:20:47,93 --> 00:20:51,95 Wilson took Lamont instead of him to Europe so there was other kinds of little 306 00:20:51,96 --> 00:20:56,84 skirmishes that were going on behind the scenes Lamont while Woodrow Wilson was 307 00:20:56,85 --> 00:20:57,92 stricken with that he was 308 00:20:57,93 --> 00:21:01,68 a very unhealthy man particular the later part of his presidency had 309 00:21:01,69 --> 00:21:04,96 a lot of headaches sicknesses he also underwent 310 00:21:04,97 --> 00:21:09,01 a number of strokes and while he was trying to go around the country in we can 311 00:21:09,02 --> 00:21:09,75 conditions and as 312 00:21:09,76 --> 00:21:13,52 a doctor was like you can't do this you have to stop you have to come back you have 313 00:21:13,53 --> 00:21:18,48 to rest Lamont was actually taking up the slack to push for this League of Nations 314 00:21:18,49 --> 00:21:19,26 and here's a guy who's 315 00:21:19,27 --> 00:21:24,01 a banker and he's on Wilson side on the one hand he Wilson develop this really 316 00:21:24,02 --> 00:21:30,01 tight close personal almost just very emotional relationship the letters back and 317 00:21:30,02 --> 00:21:33,49 forth or are really quite you know some of them are touching there's 318 00:21:33,50 --> 00:21:37,35 a lot of verbiage and stuff but he also one of the League of Nations because banks 319 00:21:37,62 --> 00:21:43,05 in order to expand need to have places and into which to expand and in general at 320 00:21:43,06 --> 00:21:46,21 the time when there were problems in countries that meant you had less trading 321 00:21:46,22 --> 00:21:49,44 partners if you had less trading partners you had less places where you could 322 00:21:49,45 --> 00:21:53,29 expand your financing and so from the standpoint of money and of the banking 323 00:21:53,30 --> 00:21:56,54 community they wanted the League of Nations and Lamont really champion the League 324 00:21:56,55 --> 00:22:00,30 of Nations even though politically they didn't want the. Because the country wanted 325 00:22:00,31 --> 00:22:04,85 to stay isolated in the end the League of Nations was shot down in the air and I'm 326 00:22:04,86 --> 00:22:09,80 going to fast forward to World War two that had tremendous problems along with how 327 00:22:09,81 --> 00:22:15,72 the treaty of oversight was negotiated that manifested in World War two in between 328 00:22:15,73 --> 00:22:19,72 those two times was the great crash of one nine hundred twenty nine and depression 329 00:22:19,73 --> 00:22:24,58 at which would which Hoover was talking about. You know the joke about the two 330 00:22:24,59 --> 00:22:30,19 bankers with his secretary of state hide and during the time between World War One 331 00:22:30,51 --> 00:22:33,77 and the crash of one nine hundred twenty nine there was tremendous speculation 332 00:22:33,78 --> 00:22:36,74 again everybody forgot the lessons of the Panic of one thousand and seven we now 333 00:22:36,75 --> 00:22:39,21 had a Fed to back banks and there was 334 00:22:39,22 --> 00:22:42,78 a lot of shading us going on particularly because of international plays that the 335 00:22:42,79 --> 00:22:46,87 bankers thought they could now do so trading into Latin or giving loans into Latin 336 00:22:46,88 --> 00:22:51,68 America looking at Sugar constellations in Latin America and so forth where they 337 00:22:51,69 --> 00:22:55,27 could really get speculators to invest in sort of turn that into profit for the 338 00:22:55,28 --> 00:22:55,80 bankers and 339 00:22:55,81 --> 00:23:00,07 a lot of that stuff was based on faulty numbers and speculation and nobody looking 340 00:23:00,08 --> 00:23:04,28 Washington as to what the bankers were doing because at the time the regulations 341 00:23:04,29 --> 00:23:09,02 didn't exist and from World War one through the one nine hundred twenty nine there 342 00:23:09,03 --> 00:23:13,50 were three sects separate presidents who did nothing or didn't care to do anything 343 00:23:13,51 --> 00:23:17,39 to stop the sort of party of speculation of the stock market bubbles after the war 344 00:23:17,40 --> 00:23:20,70 this was the time to do it America was it was about America the bankers were about 345 00:23:20,71 --> 00:23:25,39 America supposedly and none of the presidents from Harding to Coolidge to Hoover 346 00:23:25,40 --> 00:23:28,64 wanted to do anything to stop the party they also had 347 00:23:28,65 --> 00:23:32,11 a very common treasury secretary named Andrew Mellon who happened to have been 348 00:23:32,12 --> 00:23:35,86 a millionaire and happened to have left in disgrace in one nine hundred thirty two 349 00:23:35,87 --> 00:23:41,20 before Hoover left because he was doing some shady things with tax evasion this is 350 00:23:41,21 --> 00:23:48,02 the treasury secretary so that was the period during which the bubble of the crash 351 00:23:48,03 --> 00:23:50,90 in one thousand nine twenty nine happened and when it crashed when the market 352 00:23:50,91 --> 00:23:55,29 crashed and it fell on the faces of the general population that's when F.D.R. 353 00:23:55,30 --> 00:23:56,56 Came in when F.D.R. 354 00:23:56,57 --> 00:24:02,44 Came in. He wanted to do something obviously to stabilize the country economically 355 00:24:02,45 --> 00:24:07,40 but also to stabilize the banking system now he was also friends with the Morgans 356 00:24:07,41 --> 00:24:11,57 in fact his father James Roosevelt and J.P. 357 00:24:11,58 --> 00:24:14,57 Morgan back in the early one thousand nine hundred ten created 358 00:24:14,61 --> 00:24:18,75 a club called the Metropolitan Club which still exists in New York City where all 359 00:24:18,76 --> 00:24:23,16 the sort of political and financial important people the country would get together 360 00:24:23,36 --> 00:24:26,90 and discuss matters of the country so that again the two families were pretty and 361 00:24:26,91 --> 00:24:27,02 to 362 00:24:27,03 --> 00:24:30,54 a lot going back to the beginning of the century and when it time it came time though 363 00:24:30,55 --> 00:24:36,49 to separate banks and to remove speculation from the depositors money from the 364 00:24:36,50 --> 00:24:40,22 citizens money and stabilize the country after I actually went up against the 365 00:24:40,23 --> 00:24:44,66 Morgans even though he was friends with them he actually went against them because 366 00:24:44,67 --> 00:24:45,59 they didn't want 367 00:24:45,78 --> 00:24:48,54 a separation of speculation in the process because they don't have 368 00:24:48,55 --> 00:24:51,49 a lot of deposits that's not the kind of bank they were they did big things with 369 00:24:51,50 --> 00:24:55,50 big companies and big countries they didn't want to have any sort of separation of 370 00:24:55,51 --> 00:24:59,96 being able to issue debt into countries and to have any sort of speculative power 371 00:24:59,97 --> 00:25:03,06 to decide which countries they were going to issue debt into and so they were very 372 00:25:03,07 --> 00:25:07,88 against this and three successive very senior people at Morgan wrote many letters 373 00:25:07,89 --> 00:25:10,26 talked to went to the White House advised F.D.R. 374 00:25:10,27 --> 00:25:15,72 Not to split up the banks but went for Eldridge the man who Nelson Eldridge was 375 00:25:15,73 --> 00:25:20,30 convalescing at his son back in one nine hundred ten was now had 376 00:25:20,31 --> 00:25:24,11 a chase and he saw things differently he decided that actually would be better to 377 00:25:24,12 --> 00:25:27,57 have the banks separated and the little known story I didn't know this until I went 378 00:25:27,58 --> 00:25:31,59 through the material I'm sort of been talking about it in talks and in the book and 379 00:25:31,60 --> 00:25:36,46 that winter Baldridge worked with Roosevelt. To create Glass Steagall Act to 380 00:25:36,47 --> 00:25:40,55 separate the speculative activities from the depositors because he thought that it 381 00:25:40,56 --> 00:25:45,52 would be better for the country if people had confidence in the banks in fact 382 00:25:45,53 --> 00:25:50,28 Roosevelt felt it would be better for the country not just domestically but also 383 00:25:50,29 --> 00:25:54,97 you know on the sort of emerging superpower stage if things were solid at home and 384 00:25:54,98 --> 00:25:57,67 so winter Alberts took out a an article 385 00:25:57,74 --> 00:26:03,90 a front page spread in The New York Times to advocate the separation of banks and 386 00:26:03,91 --> 00:26:09,47 to speculative and commercial or deposit oriented functions before the act was even 387 00:26:09,48 --> 00:26:12,53 passed and in the first eight days that F.D.R. 388 00:26:12,54 --> 00:26:18,26 Was in office. And the new head of national Citibank James Perkins who were placed 389 00:26:18,27 --> 00:26:19,62 the old head Charles Mitchell as 390 00:26:19,63 --> 00:26:23,70 a whole other story was very very shady in tax evasion and just just sort of 391 00:26:23,71 --> 00:26:30,60 a precursor to Sandy Weill of Citigroup. Those two guys knew Roosevelt very well 392 00:26:30,61 --> 00:26:35,82 and they actually promoted his efforts and he in return helped stabilize their 393 00:26:35,83 --> 00:26:40,20 banks now they also have personal motives which is that they wanted to compete 394 00:26:40,21 --> 00:26:43,25 against the Morgan Bank which had done all this war financing in which they had 395 00:26:43,26 --> 00:26:46,52 been competing with for years they wanted to sort of be supreme to the Morgan bank 396 00:26:46,71 --> 00:26:52,31 so that was an ulterior motive but they could also sort of straddle this idea of 397 00:26:52,35 --> 00:26:58,12 the public being more secure as well as they being more powerful and having this 398 00:26:58,13 --> 00:27:01,17 alliance with the president because it made sense to them so at the time things 399 00:27:01,18 --> 00:27:07,35 were going really on both on both fronts and through World War two the Chase Bank 400 00:27:07,36 --> 00:27:09,39 became more involved in financing as 401 00:27:09,40 --> 00:27:13,51 a result so again there was another business motive for that as did national 402 00:27:13,52 --> 00:27:17,29 Citibank because they had a national Citibank had supported F.D.R. 403 00:27:17,30 --> 00:27:20,20 He turned to them for support in return and as 404 00:27:20,21 --> 00:27:25,54 a result National City Bank started to become its own preeminent bank in the Big 405 00:27:25,55 --> 00:27:31,43 Six because it was the primary bank. That issued war bonds in that way and then its 406 00:27:31,44 --> 00:27:35,49 head went around the country with the treasury secretary with Morgenthau who's the 407 00:27:35,50 --> 00:27:36,88 treasury secretary of F.D.R. 408 00:27:37,08 --> 00:27:43,49 To gather funds from individuals by promoting the idea of of 409 00:27:44,08 --> 00:27:49,22 more bonds in return for Also opening accounts with National City back so it was 410 00:27:49,23 --> 00:27:53,67 a good way to basically raise money for the war as well as to increase their 411 00:27:53,68 --> 00:27:58,06 deposit base so the other day again they had ulterior motives and as 412 00:27:58,07 --> 00:28:01,27 a result after the war National City Bank started growing in importance and it was 413 00:28:01,28 --> 00:28:01,89 also because of 414 00:28:01,90 --> 00:28:06,27 a personal lines because between the head of the National City Bank and the F.D.R. 415 00:28:06,28 --> 00:28:10,85 Administration by the time Truman came in fast forward through the forty's through 416 00:28:10,86 --> 00:28:17,63 the sixty's but between Truman and Eisenhower. There was. Similar alliances with 417 00:28:17,64 --> 00:28:21,93 with was sort of new people except when it was still there who was a U.K. 418 00:28:21,94 --> 00:28:25,99 Ambassador for Eisenhower he was one of the bankers they got Eisenhower to run for 419 00:28:25,100 --> 00:28:30,46 office at the time after the War Eisenhower was considering whether he should vote 420 00:28:30,47 --> 00:28:33,34 Republican be republican be Democrat not run at all it was really 421 00:28:33,35 --> 00:28:36,83 a series of bankers who just made him be Republican and just wanted him to be 422 00:28:36,84 --> 00:28:43,26 president and in return during his administration he helped them expand globally so 423 00:28:43,27 --> 00:28:46,100 after World War two And during the Cold War His doctrine was such that the United 424 00:28:47,01 --> 00:28:52,64 States politically and militarily now would back countries around the world that 425 00:28:52,99 --> 00:28:56,60 were leaning capitalists and they would fight against countries or protect 426 00:28:56,79 --> 00:29:00,89 countries from other countries that were communist and that was the whole sort of 427 00:29:00,90 --> 00:29:05,33 crux of the military aspect of the Cold War but the financial aspect of the Cold 428 00:29:05,34 --> 00:29:08,38 War was really aligned on the same side because chase 429 00:29:08,39 --> 00:29:11,79 a National City Bank and all the guys that were running them wanted to expand 430 00:29:11,80 --> 00:29:17,27 themselves and so they worked with Eisenhower to set up branches and outposts and 431 00:29:17,28 --> 00:29:19,46 regions throughout the world where they thought they could have 432 00:29:19,47 --> 00:29:21,94 a stronghold militarily and from 433 00:29:21,95 --> 00:29:25,76 a new open trade perspective and they could open up branches one of them was Cuba 434 00:29:26,56 --> 00:29:29,61 in one thousand nine hundred fifty five national Citibank opened three branches in 435 00:29:29,62 --> 00:29:31,27 Cuba chase opened a couple there was 436 00:29:31,28 --> 00:29:36,95 a sly deal that Cuba could be the open branch office to the rest of Latin America 437 00:29:36,96 --> 00:29:39,32 which was in the sights of these banks in terms of 438 00:29:39,44 --> 00:29:43,87 a place to make money from and nine hundred fifty nine Fidel Castro when he became 439 00:29:44,35 --> 00:29:48,58 head of Cuba kicked them all out nationalized it so they also had gone before that 440 00:29:48,59 --> 00:29:51,51 to Beirut where they thought that they could also open branches there and that 441 00:29:51,52 --> 00:29:54,76 would give them an outpost of them up Middle East and as they were opening these 442 00:29:54,77 --> 00:29:59,74 branches in the fifty's American military power Eisenhower was behind them on 443 00:29:59,75 --> 00:30:03,63 a personal basis they're all really good friends Eisenhower was just 444 00:30:03,67 --> 00:30:07,50 a master letter writer. I spent 445 00:30:07,51 --> 00:30:11,19 a lot of time in Abilene Kansas where we're No one spends time it's of 446 00:30:11,33 --> 00:30:15,02 a small little town in Mill and I was there in August so it was it was it was 447 00:30:15,03 --> 00:30:21,16 really hot and silent. It was me and this other guy in the live in the archives who 448 00:30:21,17 --> 00:30:24,19 was studying sort of cattle raising or something because Eisenhower had been 449 00:30:24,20 --> 00:30:30,34 a you've been involved in but there was and I was but. The amount of 450 00:30:31,10 --> 00:30:34,63 correspondence between Eisenhower Of course he had been at Columbia but he wasn't 451 00:30:34,64 --> 00:30:35,71 really really grow up as 452 00:30:35,72 --> 00:30:40,06 a banker he just forces these really tight relationships immediately with with 453 00:30:40,07 --> 00:30:45,69 everyone who was anyone out of the big six banking community and they in turn just 454 00:30:45,70 --> 00:30:49,56 had this very lovely correspondence where Eisenhower allowed them to grow 455 00:30:49,57 --> 00:30:54,93 domestically as well and many many mergers took place in finance in the fifty's and 456 00:30:54,94 --> 00:31:00,03 he also backed them internationally and they backed him and the letters that he 457 00:31:00,04 --> 00:31:03,40 wrote he has to go up and like every night just write tons who dictate and there 458 00:31:03,41 --> 00:31:08,54 was no spellchecker word there was just dictation of just mounds and mounds of 459 00:31:08,95 --> 00:31:13,31 correspondence trying to figure out what should be done and how things should go 460 00:31:13,32 --> 00:31:15,61 and all sorts of things like that and he asked 461 00:31:15,62 --> 00:31:19,54 a lot from these bankers who are not necessarily in his Cabinet who are not even 462 00:31:19,55 --> 00:31:24,96 appointed bankers in his cabinet as well but just to help him with economic 463 00:31:24,97 --> 00:31:30,41 strategy and some of them really push it in their behalf and there is this one guy 464 00:31:30,45 --> 00:31:34,21 George Whitney who was the brother of Richard Whitney who was the guy who bought 465 00:31:34,22 --> 00:31:37,94 all the stocks on the New York Stock Exchange back in the twenty's and who had 466 00:31:37,95 --> 00:31:43,84 subsequently gone to jail for other fraud but his brother had been 467 00:31:43,85 --> 00:31:47,82 a partner at Morgan for decades and he actually had this really tight relationship 468 00:31:47,83 --> 00:31:51,68 with Eisenhower they played golf together and Eisenhower played golf with 469 00:31:51,69 --> 00:31:56,89 a lot of bankers one particular good Rudolph friends and he said to him for example 470 00:31:56,90 --> 00:32:00,26 when Eisenhower was looking at tax policies for the United States whether they 471 00:32:00,27 --> 00:32:04,36 should reduce taxes for corporations or reduce them for individuals and George 472 00:32:04,37 --> 00:32:10,77 Whitney fervently pushed Eisenhower not to reduce taxes on corporations at the 473 00:32:10,78 --> 00:32:12,83 expense of individuals because he even though he was 474 00:32:12,84 --> 00:32:19,19 a banker said I think that money in the pockets of. The citizens actually means 475 00:32:19,20 --> 00:32:24,03 more to the overall economy than it does with these companies they're doing OK and 476 00:32:24,04 --> 00:32:28,11 I mention that not necessary to glorify George Whitney but to say that there was 477 00:32:28,12 --> 00:32:31,43 this period in our history which is very very different from where we've gotten to 478 00:32:31,44 --> 00:32:37,90 now where these alliances were tight the the personal the political financial and 479 00:32:37,91 --> 00:32:41,43 all of that but there was something in them that was actually beneficial or could 480 00:32:41,44 --> 00:32:44,98 sort of at least in vision though not perfectly the fact that if you had 481 00:32:44,99 --> 00:32:48,53 a stronger economy from the ground up that might be better for everyone as opposed 482 00:32:48,54 --> 00:32:55,21 to being you know completely self-serving and sociopathic. Which is where to so 483 00:32:55,37 --> 00:32:59,73 but what happened was between the sixty's and the seventy's is that that sort of 484 00:32:59,74 --> 00:33:03,49 idea started to break down when J.F.K. 485 00:33:03,50 --> 00:33:09,89 Came into office. For the short time that he was there he had relationships with 486 00:33:09,90 --> 00:33:13,74 bankers in fact he and David Rockefeller who was coming to the forefront of the 487 00:33:13,75 --> 00:33:15,80 Chase Bank at this point he had been in the bank for 488 00:33:15,81 --> 00:33:20,21 a couple decades and was slated to become its chairman again the great nephew of 489 00:33:20,22 --> 00:33:25,28 one from Eldridge who had been the chairman of Chase and connected to Nelson 490 00:33:25,29 --> 00:33:27,80 Eldridge with John McCoy another fellow in between who was 491 00:33:27,81 --> 00:33:33,34 a sort of protege of the Rockefeller family. He wanted. The country to continue to 492 00:33:33,35 --> 00:33:38,08 sort of do what it was doing under Eisenhower which was to back more financial 493 00:33:38,09 --> 00:33:42,09 expansion into these countries to back more private interests into these countries 494 00:33:42,32 --> 00:33:42,88 and J.F.K. 495 00:33:42,89 --> 00:33:47,27 Kind of didn't want to do that he wanted to he believed that allowing Latin America 496 00:33:47,28 --> 00:33:51,77 to be safe on its own and to be economically stable on its own was actually better 497 00:33:51,78 --> 00:33:56,98 for America and that to have too much private investment and to turn it into sort 498 00:33:56,99 --> 00:34:01,09 of international hands was negative for America and negative for Latin America and 499 00:34:01,10 --> 00:34:03,59 so on those two things they didn't see eye to eye and that was kind of where 500 00:34:03,60 --> 00:34:06,90 a little break started to happen between these alliances of you do this for me I do 501 00:34:06,91 --> 00:34:11,31 this for you and we'll both get power and we'll both sort of at least do something 502 00:34:11,32 --> 00:34:17,10 for the country as well. Though David Rockefeller then started to get very public 503 00:34:17,11 --> 00:34:19,49 about his disagreements with J.F.K. 504 00:34:19,50 --> 00:34:26,29 And in this article in Life magazine in one nine hundred sixty two. He 505 00:34:26,30 --> 00:34:30,57 actually wrote against if it's a first time a sort of private citizen 506 00:34:30,58 --> 00:34:33,44 a banker had written against J.F.K. 507 00:34:33,45 --> 00:34:37,70 And against his policies and that sort of created started a rift but J.F.K. 508 00:34:37,71 --> 00:34:40,96 Learned quickly and he decided to get the bankers back on board and start to give 509 00:34:40,97 --> 00:34:45,41 them concessions up through the Time War where he was assassinated four days after 510 00:34:45,42 --> 00:34:49,51 that they were Rockefeller writes a letter to L.B.J. 511 00:34:50,03 --> 00:34:54,30 The new president where he doesn't miss a beat he starts talking about what L.B.J. 512 00:34:54,31 --> 00:34:58,16 Can do in terms of his Latin American policy and L.B.J. 513 00:34:58,17 --> 00:35:03,69 Decides that his policy will be about private interests in Latin America and it's 514 00:35:03,70 --> 00:35:07,36 not just Iraq fell it's Walter Wriston who's now a fellow who's rising to the head 515 00:35:07,37 --> 00:35:10,49 a National City Bank and those two banks are now doing 516 00:35:10,50 --> 00:35:16,36 a lot of opening into that country and and that area and sort of disregarding what 517 00:35:16,37 --> 00:35:18,98 they can do nationally what they can do in America because all of 518 00:35:18,99 --> 00:35:23,23 a sudden expansion internationally seems much much much more profitable and so 519 00:35:23,24 --> 00:35:25,48 they're back on track with L.B.J. But L.B.J. 520 00:35:25,49 --> 00:35:32,03 Did something. That his next presidents didn't do which is he demanded stuff he 521 00:35:32,04 --> 00:35:36,41 said to David Rockefeller you know what I'll open this for you be on your side on 522 00:35:36,42 --> 00:35:41,45 your policy but you've got to back me and I have this great society idea and I have 523 00:35:41,46 --> 00:35:45,49 progressive ideals and you have to back me because that's the only way I'm going to 524 00:35:45,50 --> 00:35:46,78 back you now is how L.B.J. 525 00:35:46,79 --> 00:35:50,100 Worked but he did do it and he did negative things as well but he did do it in such 526 00:35:51,01 --> 00:35:51,50 a way that there was 527 00:35:51,51 --> 00:35:55,51 a give and take by the time Nixon came around and Nixon took the country off the 528 00:35:55,52 --> 00:36:00,59 gold standard because bankers wanted this idea of having less assets behind money 529 00:36:00,60 --> 00:36:03,87 because that meant more free investment because if you don't have to hold something 530 00:36:03,88 --> 00:36:07,19 against your transactions and you can do more of them you can bet more if you have 531 00:36:07,20 --> 00:36:12,45 less to lose then everything started going in opposite directions the bankers found 532 00:36:12,74 --> 00:36:16,53 that in addition to not having this restriction they have found oil in the Middle 533 00:36:16,54 --> 00:36:22,79 East and recycling and if you guys read my Seattle Times this morning. 534 00:36:24,13 --> 00:36:29,74 Well. So the point was that recycling these petro dollars of the profits that were 535 00:36:29,75 --> 00:36:33,20 now coming out of their branches and their newly forge relationships in the Middle 536 00:36:33,21 --> 00:36:36,97 East they had extra money from the outside too so because they had extra money that 537 00:36:37,01 --> 00:36:40,89 to recycle into debt in the third world and so forth they didn't have to be even 538 00:36:40,98 --> 00:36:44,14 they had less accountability even to being aligned on 539 00:36:44,15 --> 00:36:48,04 a sort of positive public basis with the presidency and then things started going 540 00:36:48,05 --> 00:36:52,94 haywire from there so between the years afterwards they pushed for more 541 00:36:52,95 --> 00:36:56,64 deregulation of their banking internationally as well as domestically and they 542 00:36:56,65 --> 00:37:00,54 started getting bailed out for their mistakes in epic ways so the third world debt 543 00:37:00,55 --> 00:37:02,48 crisis that happened in the one nine hundred eighty S. 544 00:37:02,49 --> 00:37:05,46 Under Reagan and under the first Bush was 545 00:37:05,47 --> 00:37:09,34 a direct result of that disallow him and those policies and those sort of self 546 00:37:09,38 --> 00:37:14,88 interest stead policies that enable them to take more bets at the expense of the 547 00:37:14,89 --> 00:37:17,98 government at the expense of the American people and the third world debt crisis 548 00:37:17,99 --> 00:37:21,64 was an example where the government did rally substantially to help them bail their 549 00:37:21,65 --> 00:37:25,83 butt bets out that was followed in the ninety's under Clinton by the one nine 550 00:37:25,84 --> 00:37:30,02 hundred ninety four Mexican peso crisis by the Asian crisis by series of crises 551 00:37:30,03 --> 00:37:35,39 where in different ways the government stood in to to bail out these bankers and 552 00:37:35,40 --> 00:37:39,06 the relationships were not as close and personal as they had been over the many 553 00:37:39,07 --> 00:37:42,71 decades in the beginning of the century they became just more functional so there 554 00:37:42,72 --> 00:37:47,47 was still the fact that Ronald Reagan took as his treasury secretary Donald Regan 555 00:37:47,48 --> 00:37:48,33 who was the C.E.O. 556 00:37:48,34 --> 00:37:51,62 Of Merrill Lynch So the first Treasury Secretary from what is now part of 557 00:37:51,63 --> 00:37:54,00 a Wall Street big six banks that was 558 00:37:54,04 --> 00:37:57,79 a treasury secretary for President was chosen by Reagan but he was also friends 559 00:37:57,80 --> 00:38:03,14 Reagan was with with George Bush and George Bush as his treasury secretaries took 560 00:38:03,15 --> 00:38:06,78 Nicholas Brady also a senior person on Wall Street and 561 00:38:06,82 --> 00:38:10,49 a friend of the family the Bradys in the bushes had gone back for decades and 562 00:38:10,50 --> 00:38:14,84 decades in the bushes from one thousand nine hundred under George Walker one of the 563 00:38:14,85 --> 00:38:17,82 sort of patriarchical Bushes had had 564 00:38:17,83 --> 00:38:23,27 a bank that became part of Merrill Lynch which has become part of Bank of America 565 00:38:23,28 --> 00:38:26,95 so going to Silicon. Hundred Year connection that ultimately got to 566 00:38:26,96 --> 00:38:30,73 a position in Washington where deregulation started happening in the eighty's under 567 00:38:30,74 --> 00:38:34,89 Bush's taskforce which rate which Reagan asked Bush to to create Reagan didn't 568 00:38:34,90 --> 00:38:40,73 really get involved in in sort of details but but Bush did for him with these men 569 00:38:40,74 --> 00:38:44,54 who pushed deregulation in Congress and the reason they did it now is not about 570 00:38:44,73 --> 00:38:47,97 American superiority was about American competitiveness and they said that if 571 00:38:47,98 --> 00:38:53,45 America had to compete in today's Globe the politicians the treasury secretaries 572 00:38:53,46 --> 00:38:57,85 from these banks as well as the bankers on their side wanted to make sure that they 573 00:38:57,86 --> 00:39:03,75 had no impediments that they were is unregulated as possible and that they had as 574 00:39:03,76 --> 00:39:07,86 much money to use as possible if things went wrong and kind of that's where we 575 00:39:07,87 --> 00:39:11,47 wound up from here in one thousand nine hundred nine under Treasury Secretary 576 00:39:11,48 --> 00:39:13,47 Robert Rubin who was a former Co C.E.O. 577 00:39:13,48 --> 00:39:17,19 Of Goldman Sachs in the Clinton administration who helped Clinton get elected in 578 00:39:17,20 --> 00:39:21,10 the sort of new set of families that have now become more preeminent along with the 579 00:39:21,11 --> 00:39:24,79 old Bush is in Washington there was more deregulation in Glass Steagall Act was 580 00:39:24,80 --> 00:39:28,95 appealed in one nine hundred ninety nine and that created this avalanche of 581 00:39:28,96 --> 00:39:33,31 speculation that ultimately came down on everybody in two thousand and eight I was 582 00:39:33,32 --> 00:39:37,50 here in I think two thousand and nine when I talk about talked about it Takes 583 00:39:37,51 --> 00:39:44,39 a Pillage and sort of looked at how the banks had done so much bad betting after 584 00:39:44,53 --> 00:39:47,28 the one thousand nine hundred nine repeal the Glass Steagall Act because they had 585 00:39:47,29 --> 00:39:51,16 merged so substantially and everybody was fine with that from the treasury 586 00:39:51,17 --> 00:39:55,25 secretary up through the Federal Reserve that they backed these policies and the 587 00:39:55,26 --> 00:39:59,73 result ultimately was the subprime crisis of two thousand and eight and the 588 00:39:59,74 --> 00:40:02,84 bailouts that have been epic and the fact that the Federal Reserve today which it 589 00:40:02,85 --> 00:40:04,34 started as a bank to the banks 590 00:40:04,63 --> 00:40:09,52 a bank to the bankers bank to the banks now for the big six banks has done 591 00:40:09,53 --> 00:40:16,36 substantially more support in the form of an epic amount of subsidies which equate 592 00:40:16,37 --> 00:40:21,07 to four point two trillion dollars of securities buying Treasury securities and 593 00:40:21,08 --> 00:40:24,37 mortgage securities from these banks which are sitting on the books that. Effect 594 00:40:24,78 --> 00:40:29,98 that has just been unprecedented in history that the required reserves that the Fed 595 00:40:29,99 --> 00:40:33,90 wants to supposedly make banks secure and have money in the back pocket in case 596 00:40:33,91 --> 00:40:38,07 something goes wrong is eighty six billion dollars the banks have reserved two 597 00:40:38,08 --> 00:40:43,95 point five trillion dollars as part of the whole Federal Reserve book that's doing 598 00:40:43,96 --> 00:40:48,46 nothing to help anybody so while you're getting zero percent interest on your 599 00:40:48,47 --> 00:40:51,05 savings accounts they've got two and 600 00:40:51,06 --> 00:40:54,28 a half trillion dollars of money parked at the Fed getting point twenty five 601 00:40:54,29 --> 00:40:55,20 a percent which isn't 602 00:40:55,21 --> 00:41:00,18 a lot but is still more than what you're getting. On the bonds that they have part 603 00:41:00,19 --> 00:41:04,17 of the Federal Reserve doing nothing and meanwhile the Federal Reserve Janet Yellen 604 00:41:04,18 --> 00:41:08,12 after Ben Bernanke is talking about how there are job creation mechanism when 605 00:41:08,13 --> 00:41:12,08 that's really not what they were ever created to do they were created to support 606 00:41:12,09 --> 00:41:15,47 the banking system that is really what they've done in the trillions of dollars on 607 00:41:15,48 --> 00:41:19,25 their books is just indicative of where we've gotten to because of these political 608 00:41:19,26 --> 00:41:24,16 financial alliances and this this philosophical Alliance as well as to American 609 00:41:24,17 --> 00:41:26,79 competitive and what is needed and strong banks make 610 00:41:26,80 --> 00:41:28,70 a strong country as opposed to strong people make 611 00:41:28,71 --> 00:41:33,12 a strong country and strong foundation of economics for everybody is 612 00:41:33,16 --> 00:41:39,78 a stronger way to be we have this sort of top heavy situation where the banks are 613 00:41:39,79 --> 00:41:40,16 just getting 614 00:41:40,17 --> 00:41:45,98 a tremendous amount of subsidies not passing it on and and worse than that the 615 00:41:45,99 --> 00:41:50,53 concentration of that wealth today the concentration of the risk that is behind 616 00:41:50,54 --> 00:41:53,51 that wealth because all the times in our past when we've had low interest rates 617 00:41:53,52 --> 00:41:56,88 when we allow the kind of betting when we back the betting there's always been 618 00:41:56,89 --> 00:42:01,30 a worse financial crisis afterwards which spin what history has said and if there's 619 00:42:01,31 --> 00:42:05,93 no accountability at the top of these institutions then there is nothing to counter 620 00:42:06,18 --> 00:42:08,00 that danger and that possibility of 621 00:42:08,01 --> 00:42:12,79 a bigger crisis happening happening again and that's really where we are if I close 622 00:42:12,80 --> 00:42:16,72 the book with the statement that we have to break these alliances or they will 623 00:42:16,73 --> 00:42:18,85 break us because I mean first of all taking 624 00:42:18,86 --> 00:42:22,46 a little bit of that off of Justice Louis Brandeis who wrote that in one nine 625 00:42:22,47 --> 00:42:25,96 hundred ten who said we have. To break the money trust or they will break us he was 626 00:42:25,97 --> 00:42:31,34 a very sort of visionary guy and I copied his the name of his book which is called 627 00:42:31,35 --> 00:42:35,90 Other People's Money was my first book. But nothing was really learned in the 628 00:42:35,91 --> 00:42:39,58 hundred years in fact again we have more consolidated wealth in Morgentaler power 629 00:42:39,59 --> 00:42:43,42 we have less accountability there isn't even the sort of gentlemen's nobility of 630 00:42:43,43 --> 00:42:47,77 let you know you do this for me I do this for you in there some notion of what can 631 00:42:47,78 --> 00:42:52,31 be done for the greater common good or at least the appearance of 632 00:42:52,35 --> 00:42:53,90 a public interest element being 633 00:42:53,91 --> 00:42:56,02 a part of it there is nothing like that it really is 634 00:42:56,03 --> 00:43:00,54 a very selfish very dangerous situation for us it exists today so I do say we have 635 00:43:00,55 --> 00:43:05,26 to break the alliances or they will break us and what I mean is. It's hard to see 636 00:43:05,27 --> 00:43:09,66 why after two thousand and eight Why no why but it's hard to understand the logic 637 00:43:10,15 --> 00:43:15,88 of post two thousand and eight crisis that we still have made the big banks bigger 638 00:43:16,28 --> 00:43:20,18 and that we've created more subsidies and more ballots and we have before and that 639 00:43:20,19 --> 00:43:23,63 no one in Washington seems to the absent a couple senator seems to think this is 640 00:43:23,64 --> 00:43:26,64 a problem certainly not the level of Obama certainly not the leadership level 641 00:43:26,65 --> 00:43:31,21 certainly not the Treasury Department where Jack Lew was working with Robert Rubin 642 00:43:31,22 --> 00:43:35,56 back during the Clinton administration when Glass Steagall Act was repealed there's 643 00:43:35,57 --> 00:43:39,65 just no leadership coming to even say you know this could be a problem there's 644 00:43:39,66 --> 00:43:44,53 a serious willingness to believe absent personal ations have ups and accountability 645 00:43:44,54 --> 00:43:47,69 that somehow the banks are better and somehow the economy's better when in fact it 646 00:43:47,70 --> 00:43:54,54 isn't and they're not they're just subsidized very very well and so I believe that 647 00:43:54,55 --> 00:43:59,82 if we don't do something if we don't only start to take power to ourselves and I'll 648 00:43:59,83 --> 00:44:03,25 try to end positive always a negative and people like you always 649 00:44:03,26 --> 00:44:07,75 a negative but but But what I want to say is and what I said in the. And the editor 650 00:44:07,76 --> 00:44:14,52 who made me do this is that it's important to figure out how we 651 00:44:15,41 --> 00:44:20,61 can take some power back and create our own alliance doesn't it some of it sounds 652 00:44:20,62 --> 00:44:23,12 a little pie in the sky but I've thought about it 653 00:44:23,13 --> 00:44:26,35 a lot and I've gotten this this idea from the thirty's to the sixty's work out 654 00:44:26,36 --> 00:44:31,84 everything wasn't perfect but at least there was some notion of of. A little bit of 655 00:44:32,34 --> 00:44:37,17 public interest creeping into the political financial policy discussions that we 656 00:44:37,18 --> 00:44:40,52 have to take some of this stuff back and the only way to do that is not necessarily 657 00:44:40,53 --> 00:44:44,69 to go and and we're not going to have the meeting with Obama and we're not going to 658 00:44:44,69 --> 00:44:49,77 . I would think none of us who are actually here in this room will do that but we 659 00:44:49,78 --> 00:44:54,68 are together and we can do things like support anything local in anything community 660 00:44:54,69 --> 00:44:58,76 and anything credit union like and you know buying books from third place books and 661 00:44:58,77 --> 00:45:02,84 whatever it is that starts to establish these alliances of the bottom up because 662 00:45:02,85 --> 00:45:06,01 honestly if you go back one hundred years yes there was 663 00:45:06,02 --> 00:45:09,89 a lot of money and power in these alliances but what made them so strong in terms 664 00:45:09,90 --> 00:45:15,18 of impacting the country was that they existed was that they work together was that 665 00:45:15,19 --> 00:45:18,39 they tied themselves together and I think what happens 666 00:45:18,40 --> 00:45:25,24 a lot when you think of the amount of. Just lack of leadership and and sort of 667 00:45:25,25 --> 00:45:29,26 economic danger and strife that's in the country that we have what can we possibly 668 00:45:29,27 --> 00:45:33,34 do but we can sort of learn from this idea of creating alliances with each other 669 00:45:33,64 --> 00:45:37,35 with our local finance companies with our credit unions and as I mentioned with our 670 00:45:37,36 --> 00:45:42,66 communities with our people that work with our families spreading knowledge and 671 00:45:42,67 --> 00:45:43,89 doing things together in 672 00:45:43,90 --> 00:45:47,82 a way that actually binds us better because I think and as it happened in the 673 00:45:47,83 --> 00:45:48,39 thirty's that 674 00:45:48,87 --> 00:45:52,10 a change in this country is going to come from two places that come from 675 00:45:52,11 --> 00:45:56,15 a massive crisis or many crises that will continue to impact the country or it's 676 00:45:56,16 --> 00:46:00,11 going to come from the bottom up and it's going to come from our awareness and our 677 00:46:00,12 --> 00:46:05,39 connections to each other and are not going home and doing nothing and our not 678 00:46:05,65 --> 00:46:12,13 being isolated because isolationism was and is what hurts the country whereas 679 00:46:12,14 --> 00:46:16,39 working together and supporting creating alliances actually helps the country and 680 00:46:16,40 --> 00:46:21,49 helps individuals helps us feel more empowered as well so I'm going to end on that 681 00:46:21,50 --> 00:46:28,40 note and open it up to questions thank you thank you 682 00:46:28,89 --> 00:46:32,53 for how long it's been months and months and months the Federal Reserve has been 683 00:46:32,54 --> 00:46:35,82 buying back. But eighty billion 684 00:46:36,53 --> 00:46:40,76 a month approximately about half mortgage back in the other half derivative of 685 00:46:40,89 --> 00:46:44,74 treasuries derivatives that's treasuries but it's debt Social mortgage backed 686 00:46:44,75 --> 00:46:51,39 securities is this buying of these toxic Is it paying one hundred percent on the 687 00:46:51,40 --> 00:46:55,83 dollar. So it's making the banks whole for all of this is this one of the 688 00:46:55,84 --> 00:47:00,76 foreclosure rate kind of is going slow because they can't foreclose they have to 689 00:47:00,77 --> 00:47:06,25 wait for the Federal Reserve to bail them out that's an excellent question and. It 690 00:47:06,26 --> 00:47:11,46 is absolutely true that we don't have transparency to know exactly what securities 691 00:47:11,47 --> 00:47:15,32 they are buying but they are definitely buying mortgage securities from the largest 692 00:47:15,33 --> 00:47:19,06 banks which were the ones that were most involved in the toxic securities creation 693 00:47:19,07 --> 00:47:23,61 just by by their is sheer size and how active they were in that market it's my 694 00:47:23,62 --> 00:47:23,98 belief 695 00:47:23,99 --> 00:47:27,52 a lot of those securities are toxic Ben Bernanke when he became the chairman of the 696 00:47:27,53 --> 00:47:32,11 Fed suggested this would be the most transparent Fed ever but they aren't they were 697 00:47:32,12 --> 00:47:36,33 not transparent but but that yes this is definitely case and they are paying one 698 00:47:36,34 --> 00:47:40,05 hundred percent on the dollar for all of the securities that they're getting and 699 00:47:40,06 --> 00:47:44,76 that is providing the capital and it's also providing the room on the balance 700 00:47:44,77 --> 00:47:49,86 sheets of these books of the banks to be able to engage in more activities because 701 00:47:49,87 --> 00:47:54,29 they basically clean house at one hundred percent one hundred cents on the dollar 702 00:47:54,30 --> 00:47:57,55 so yes that's absolutely in the policy in the reason for closure letting the banks 703 00:47:57,61 --> 00:48:01,41 inflating the banks at our expense and the reason foreclosures have sort of slowed 704 00:48:01,42 --> 00:48:04,32 down but not stopped is because what should have been done is the Fed sort of 705 00:48:04,33 --> 00:48:09,08 subsidize the loans at the at the that make up these securities rather than the 706 00:48:09,09 --> 00:48:13,39 securities which is what they are doing and that would have actually stabilized the 707 00:48:13,40 --> 00:48:15,88 crisis much more when people say I'm going to ask 708 00:48:15,97 --> 00:48:19,58 a question to your question but when people say you know could we could it could it 709 00:48:19,59 --> 00:48:22,41 have been different do we have to bail out the banks we know we know we didn't we 710 00:48:22,42 --> 00:48:26,20 could have actually bailed out of the borrowers because there's no particular 711 00:48:26,21 --> 00:48:32,11 reason that a borrower who is in trouble can get as much help as 712 00:48:32,15 --> 00:48:33,43 a bank or 713 00:48:33,47 --> 00:48:37,87 a banks getting much more help in the financial crisis in which the banks have 714 00:48:37,88 --> 00:48:41,95 really pushed the engineering of these loans and the creation of these toxic assets 715 00:48:41,96 --> 00:48:45,91 yes we are subsidizing more experience going to have to bail them off in the final 716 00:48:45,92 --> 00:48:51,48 analysis when these stocks of things don't produce the money. We are in this 717 00:48:51,49 --> 00:48:55,01 position now where they are they're patrolling so much subsidies at the banks that 718 00:48:55,02 --> 00:48:59,02 they've been keeping them them stable while they're letting banks clean house if 719 00:48:59,49 --> 00:49:03,64 and when that goes away and if and when there's another say large derivative trade 720 00:49:03,65 --> 00:49:06,46 it might not be subprime it could be an oil it could be in a in 721 00:49:06,47 --> 00:49:08,48 a particular country it could be in a group of It could be in 722 00:49:08,49 --> 00:49:12,27 a region it could be in Asia but what happens is that crises happen general and 723 00:49:12,28 --> 00:49:16,01 something happens because of bad credit bet those copper nine hundred seven that's 724 00:49:16,02 --> 00:49:21,46 mostly been on credit and countries sub prime Brazil whatever it might be so that I 725 00:49:21,47 --> 00:49:25,30 believe can still happen and we are still on the hook and we will still have to 726 00:49:25,31 --> 00:49:29,09 bail them out because even though there's been plans in the Frank Act of two 727 00:49:29,10 --> 00:49:33,29 thousand and ten to say the banks have to create these living wells so supposedly 728 00:49:33,30 --> 00:49:36,54 we won't bail them out if you actually read the living which was it just basically 729 00:49:36,55 --> 00:49:39,48 says that they're going to try to sell their assets and if that doesn't work we're 730 00:49:39,49 --> 00:49:42,38 going to try to sell themselves and if that doesn't work they going to come to the 731 00:49:42,39 --> 00:49:45,77 F D I C and ask for the f.d.i.c to sort it out well if 732 00:49:45,78 --> 00:49:49,24 a lot of banks do that or even one major bank does that for one major large 733 00:49:49,56 --> 00:49:53,55 convoluted transaction that really starts to collapse the whole system again which 734 00:49:53,56 --> 00:49:58,85 is why I say it's ridiculous that we have these banks as big as they are and it's 735 00:49:58,86 --> 00:50:01,60 not even just a question of money and power concentration it's 736 00:50:01,61 --> 00:50:08,22 a danger concentration. I 737 00:50:08,23 --> 00:50:12,57 was recently reminded of something from psychology class and I wonder if you've 738 00:50:12,58 --> 00:50:17,02 made this connection the experiment done in one thousand nine hundred five by Robin 739 00:50:17,03 --> 00:50:21,17 Bergen Lindley electrodes were wired up to the pleasure center of 740 00:50:21,18 --> 00:50:25,11 a rat's brain which the rat could stimulate by pressing 741 00:50:25,12 --> 00:50:26,99 a lever and what they learned is that 742 00:50:27,00 --> 00:50:32,34 a rat will push the lever continuously ignoring food ignoring water until the rat 743 00:50:32,38 --> 00:50:34,76 dies and so I got 744 00:50:34,77 --> 00:50:40,74 a shock of recognition when I read that some traders say that making 745 00:50:41,04 --> 00:50:42,16 a really good transaction is 746 00:50:42,17 --> 00:50:47,88 a bigger high for them than sex which to me sounds insane but this is them 747 00:50:47,89 --> 00:50:54,15 describing themselves and these are not stupid people I'm sure they're not all 748 00:50:54,21 --> 00:51:01,20 climate change deniers what. Could it be some of them knowing 749 00:51:01,21 --> 00:51:08,05 the facts aren't capable of saving their own lives they work for the same moneyed 750 00:51:08,06 --> 00:51:12,05 interests that pressure our government to take the same kind of huge risk with our 751 00:51:12,06 --> 00:51:16,80 environment that they have with our economy. And I think this is the most primal 752 00:51:16,81 --> 00:51:23,49 problem we face in effecting any real change. So my question is What do you 753 00:51:23,54 --> 00:51:28,64 think can or should be done we obviously need more than just regulation you know we 754 00:51:28,65 --> 00:51:31,75 need more regulation and we do need more than alliances from the ground up in our 755 00:51:31,76 --> 00:51:35,23 awareness and our fighting from from from the bottom up we need 756 00:51:35,24 --> 00:51:39,00 a seismic shift in the people that run these institutions we do need them to be 757 00:51:39,01 --> 00:51:39,90 small it's not even just 758 00:51:39,91 --> 00:51:43,16 a question of dividing risk from the positives the idea that they're the 759 00:51:43,17 --> 00:51:45,55 concentration of whether it's an oil company or 760 00:51:45,56 --> 00:51:50,20 a bank of so much control over resources or money is what's creating inherent 761 00:51:50,21 --> 00:51:55,26 stability we can't write registration we can only continue to to to make it heard 762 00:51:55,27 --> 00:51:56,96 and to do things on a local basis or on 763 00:51:56,97 --> 00:52:01,31 a even connecting with localities throughout the world the changes that but you 764 00:52:01,32 --> 00:52:07,72 know back to the rat thing you know. When. Firstly they do get 765 00:52:07,73 --> 00:52:12,74 fed. And they do get to drink bankers while they were doing stuff because you can 766 00:52:12,75 --> 00:52:17,29 always order in and there's lots of but but but so it's not that they're not at 767 00:52:17,30 --> 00:52:19,93 that the point is that it might be giving up that they're not giving up 768 00:52:20,18 --> 00:52:26,13 a lot and in fact they've traitors or really the leaders of these banks who 769 00:52:26,14 --> 00:52:31,53 position what happens with them and how it gets manifested in the world are have 770 00:52:31,54 --> 00:52:37,95 been rewarded. For their mistakes and they've not been held 771 00:52:37,96 --> 00:52:42,99 accountable for their institutional risk and the fines that they've paid to the 772 00:52:43,03 --> 00:52:45,33 Department of Justice has made them pay or the F.C.C. 773 00:52:45,34 --> 00:52:49,02 Has made them pay have been nothing compared to the risk they take and the assets 774 00:52:49,03 --> 00:52:52,75 they have the assets they've been allowed to amass since the last crisis and after 775 00:52:52,76 --> 00:52:58,17 each crisis. So so. Is 776 00:52:58,18 --> 00:53:04,53 a set of rules but it's also really an entire policy shift environmentally and 777 00:53:04,54 --> 00:53:09,14 financially that needs to happen and that might not happen next year that might not 778 00:53:09,15 --> 00:53:12,73 you know we're talking about the thirty's happened after the panic of zero seven 779 00:53:12,74 --> 00:53:13,75 and even the eighty ninety S. 780 00:53:13,76 --> 00:53:13,83 Are 781 00:53:13,84 --> 00:53:17,36 a lot of problems going on the speculations I mean things might happen in longer cycles 782 00:53:17,37 --> 00:53:19,66 but we definitely need to push 783 00:53:19,67 --> 00:53:25,28 a need to be aware and it's policy it's decisions it's leadership it's not only the 784 00:53:25,29 --> 00:53:31,02 regulations they're just sort of aspects of it that are required. To raise 785 00:53:31,06 --> 00:53:34,99 consciousness about this can we I mean they themselves some of the more 786 00:53:35,00 --> 00:53:36,65 illuminating this James will be 787 00:53:36,66 --> 00:53:40,36 a viewer can we help trying to figure spotlight on this yeah I think I think you 788 00:53:40,37 --> 00:53:45,13 know that this well they do until it gets louder I mean in in in the thirty's there 789 00:53:45,14 --> 00:53:48,86 was laughter until there was people doing runs on banks and then there was 790 00:53:48,87 --> 00:53:53,19 a decision to alter mentally where people had to take 791 00:53:53,20 --> 00:53:56,06 a step back and maybe they're different men maybe it was different times maybe the 792 00:53:56,07 --> 00:54:00,22 outrage in the population was so much more tangible but that but the combination 793 00:54:00,23 --> 00:54:04,66 actually affected decent change not perfect change for much better change than 794 00:54:04,67 --> 00:54:08,73 anything we've seen recently so I So in terms of uprising in terms of that together 795 00:54:08,74 --> 00:54:13,81 and I think we have so much more power as people if we actually work together and 796 00:54:13,82 --> 00:54:14,44 again it sounds 797 00:54:14,45 --> 00:54:19,39 a little sort of pie in the sky but we really do we just don't tend to because it's 798 00:54:19,40 --> 00:54:22,56 hard because we're busy because we're working because of all of those things but 799 00:54:22,68 --> 00:54:29,02 but there is something about the feeling both the desperation but also of of 800 00:54:29,59 --> 00:54:35,66 the need to fight against it in the thirty's as bad as things were that helped move 801 00:54:35,67 --> 00:54:39,20 the nation forward ultimately because people were on the same page even though it 802 00:54:39,24 --> 00:54:43,01 came from a negative place and became a positive thing I read 803 00:54:43,02 --> 00:54:49,61 a lot about the dot com crash. And there seemed to me that repeal 804 00:54:50,34 --> 00:54:51,21 last Eagle has 805 00:54:51,22 --> 00:54:57,42 a lot to do with that although it didn't happen until very long before the crash 806 00:54:58,02 --> 00:55:02,94 this is accurate though that with the repeal played into the crash you know any 807 00:55:02,95 --> 00:55:04,35 time and there was there was 808 00:55:05,04 --> 00:55:08,45 a weakening of regulations even before the final repeal it had been happening 809 00:55:08,46 --> 00:55:09,59 throughout the eighty's and even 810 00:55:09,60 --> 00:55:13,22 a little bit in the late seventy's and the thing is like I mentioned before about 811 00:55:13,23 --> 00:55:17,35 gold or about low interest rates or what are cheap money when it whenever there is 812 00:55:17,36 --> 00:55:17,62 just 813 00:55:17,63 --> 00:55:25,49 a an abundance of money with no accountability. Bad bets happen. You 814 00:55:25,50 --> 00:55:29,56 know part of it the Tory environment part of it's human nature part of it's the 815 00:55:29,57 --> 00:55:33,84 idea that you know you keep on hitting the whatever number on the real at table or 816 00:55:33,85 --> 00:55:36,88 another hand of blackjack or whatever it is in particular when money is cheap to 817 00:55:36,89 --> 00:55:40,67 come by you do that more so the deregulation and Hance dollar of that the one nine 818 00:55:40,68 --> 00:55:45,22 hundred ninety nine Glass Steagall Act enhanced all of that but also it was it was 819 00:55:45,23 --> 00:55:50,84 happening into the dot com crisis in the ninety's which which makes you wonder why 820 00:55:51,29 --> 00:55:54,61 the Glass Steagall Act was repealed right after that but but again it's 821 00:55:54,62 --> 00:56:01,17 a sense of. Sort of omnipresent philosophical alignment between the leaders in 822 00:56:01,18 --> 00:56:04,15 Washington and the leaders on last through that says that all we need to do is 823 00:56:04,89 --> 00:56:09,23 continue to compete globally and have as little restrictions to do that and you 824 00:56:09,24 --> 00:56:15,40 just have another crisis. You were speaking of forming alliances and one bright 825 00:56:15,41 --> 00:56:16,11 spot is 826 00:56:16,12 --> 00:56:20,09 a loser with Warren and I was wondering if there are others out there that I should 827 00:56:20,10 --> 00:56:24,17 be aware of of we should be aware of Yeah I mean and also one other person and I 828 00:56:24,18 --> 00:56:24,55 mean maybe 829 00:56:24,56 --> 00:56:29,65 a result is Alan Brown who's running the public banking Institute and who does is 830 00:56:29,66 --> 00:56:35,21 also running for in that state. The Treasury and the State Treasury and in 831 00:56:35,22 --> 00:56:41,09 California she and her her alliances her people are very much 832 00:56:41,93 --> 00:56:45,09 involved in this idea of the public banking initiative is is sort of like 833 00:56:45,10 --> 00:56:47,53 a local banking or credit union issued of but on 834 00:56:47,54 --> 00:56:49,31 a sort of broader basis which is that if you have 835 00:56:49,32 --> 00:56:53,07 a bank that's really just doing banking activities that are plain vanilla you know 836 00:56:53,08 --> 00:56:55,57 taking deposits making loans checking accounts 837 00:56:55,58 --> 00:56:59,14 a couple credit cards nothing crazy but they're not betting with it on trillions of 838 00:56:59,15 --> 00:57:02,72 dollars of derivatives on the market or supreme prime mortgage packages it's more 839 00:57:02,73 --> 00:57:06,68 stable for for everyone involved and so that initiative is really important as 840 00:57:06,69 --> 00:57:10,88 a form of course has been advocating for Glass Steagall reform and everything else 841 00:57:10,89 --> 00:57:14,65 Senator Bernie Sanders is someone who's on that page as well so there are people 842 00:57:14,66 --> 00:57:18,14 and I was about Warren's doing well in her books out all over the you know it's 843 00:57:18,15 --> 00:57:21,52 a book but I'll say one other thing about alliances out time out everybody getting 844 00:57:21,53 --> 00:57:25,91 together what I found very recently and really recently like since my book came out 845 00:57:25,92 --> 00:57:31,12 which is been two weeks that we authors who are writing about this stuff who 846 00:57:31,13 --> 00:57:35,98 haven't really necessarily all met each other are starting to talk to each other 847 00:57:36,26 --> 00:57:40,61 and that's kind of kind of interesting There's was one man for example Harvey Kazan 848 00:57:40,62 --> 00:57:41,31 author uses for in 849 00:57:41,32 --> 00:57:44,67 a book called The Fight for the four freedoms which talks about some of the 850 00:57:44,71 --> 00:57:45,70 initiatives that F.D.R. 851 00:57:45,71 --> 00:57:49,99 Placed in the thirty's and so forth I didn't know him but we sort of aligned during 852 00:57:50,00 --> 00:57:53,79 the process of our books James records who writes about the death of money and his 853 00:57:53,80 --> 00:57:57,72 other books I don't know him either but we've become Twitter friends so these 854 00:57:57,73 --> 00:58:01,80 alliances are there you know so it might be next door to you and it might be 855 00:58:01,81 --> 00:58:07,93 Elizabeth Warren's blog or Twitter account but but it's they can be there hi. 856 00:58:09,48 --> 00:58:11,70 So I'm very pleased to have been here you had 857 00:58:11,71 --> 00:58:18,25 a very good discussion. On the whole process leading up to where we are today. 858 00:58:19,77 --> 00:58:25,62 However I just wanted to bring up I disagree with you on one thing in there's the 859 00:58:25,62 --> 00:58:31,85 general my sense of the general urgency of. The situation I mean obviously the 860 00:58:31,86 --> 00:58:35,30 finances since two thousand and eight have been. You know 861 00:58:35,31 --> 00:58:40,70 a clown show. The DOD Frank bill which has been pasted over as 862 00:58:40,71 --> 00:58:47,44 a new glass steagall reform has in title to the new the the bail in 863 00:58:47,82 --> 00:58:48,88 perspective which is 864 00:58:49,54 --> 00:58:55,86 a very different thing than separation of the banks it's the. Essentially stealing 865 00:58:55,87 --> 00:59:02,12 of the depositors they call in the unsecured investors and the banks by that living 866 00:59:02,13 --> 00:59:07,97 will thing I was talking about OK sure but. I mean it's funny that you mentioned. 867 00:59:09,77 --> 00:59:12,70 V Well me first of all it seems like 868 00:59:12,71 --> 00:59:19,12 a bail in that could pursue by any number of being failures and these guys go for 869 00:59:19,67 --> 00:59:24,96 stealing of people's deposits could pursue protégé any number of catastrophic 870 00:59:25,36 --> 00:59:30,65 meltdown phases I mean runs on banks you name it but I mean one thing to just 871 00:59:30,85 --> 00:59:35,41 thinking about the whole situation that we're seeing with Eastern Europe Ukraine 872 00:59:35,42 --> 00:59:39,44 and Russia it's funny you brought up this thing about World War one in the bankers 873 00:59:39,88 --> 00:59:44,11 I mean this thing could trigger what we had at the World War It was 874 00:59:44,12 --> 00:59:48,59 a question I heard he was given that I mean it seems like the people should be 875 00:59:48,60 --> 00:59:52,20 called on to do is to really mobilize from the highest level to get Glass Steagall 876 00:59:52,21 --> 00:59:58,35 through. Not just at the local level but you know national and to Yes You know I 877 00:59:58,36 --> 01:00:01,83 mean I went out when I say the local level I'm talking about alliances but but one 878 01:00:01,84 --> 01:00:05,28 of the solutions is definitely to bring back last eagle and I mean I and sort of 879 01:00:05,29 --> 01:00:10,68 all my book I mean at all my books with that except for the novel but but but I 880 01:00:10,69 --> 01:00:12,59 agree you know and I mentioned 881 01:00:12,60 --> 01:00:16,88 a crisis to I think it was you know now as it was we went but 882 01:00:17,10 --> 01:00:21,60 a crisis could happen in any manner and I could be an American be something to do 883 01:00:21,61 --> 01:00:25,27 with credit but something to do with the Ukraine and what's going on there there's 884 01:00:25,98 --> 01:00:28,05 you know President Obama spent some time with 885 01:00:28,06 --> 01:00:31,26 a bunch of bankers trying to tell them in advance what the policy might be with 886 01:00:31,27 --> 01:00:36,76 respect to Russia and the Ukraine. You know exactly why I don't know those records 887 01:00:36,77 --> 01:00:40,74 will be available for decades if there ever available but the point was to somehow 888 01:00:40,74 --> 01:00:46,12 . Get them to I guess whether it's to dial back their bets or not take positions or 889 01:00:46,13 --> 01:00:48,70 see what they were positioned in or whatever it might be because something 890 01:00:48,71 --> 01:00:52,14 catastrophic Lee bad could happen on an economic standpoint on 891 01:00:52,15 --> 01:00:56,49 a financial standpoint to them and so that was that's something that yes that's 892 01:00:56,50 --> 01:00:56,91 definitely 893 01:00:56,92 --> 01:01:02,08 a potential problem militarily as well as there for financially because you know 894 01:01:02,09 --> 01:01:06,90 a lot of times those those two things will do together so that it is an urgency I 895 01:01:06,91 --> 01:01:12,98 mean the fact that we are subsidizing. The current structure of these institutions 896 01:01:13,02 --> 01:01:18,93 and these alliances don't ask for accountability the political from the financial 897 01:01:18,94 --> 01:01:21,12 like even they've done in the past is 898 01:01:21,13 --> 01:01:25,09 a very bad situation so there's there's things we can do in the things we can 899 01:01:25,10 --> 01:01:26,93 demand and there is the possibly there's 900 01:01:26,94 --> 01:01:29,67 a very real possibility but I don't want to end on a negative No but there's 901 01:01:29,68 --> 01:01:31,90 a very real possibility of 902 01:01:32,32 --> 01:01:37,74 a very very bad financial crisis because nothing has been done to reform the 903 01:01:37,75 --> 01:01:42,64 institutions that would be at the center of it and Dodd Frank Yes Frank was it was 904 01:01:42,68 --> 01:01:43,00 is 905 01:01:43,04 --> 01:01:47,80 a sham in that regard and it isn't the Glass Steagall Act and it doesn't really do 906 01:01:47,81 --> 01:01:48,32 anything it just has 907 01:01:48,33 --> 01:01:55,20 a lot lot more pages so. Last question. How do you feel 908 01:01:55,21 --> 01:01:59,27 about the recent phenomenon of the emergence of alternative currencies like Bitcoin 909 01:01:59,27 --> 01:02:00,84 . Decline. 910 01:02:06,07 --> 01:02:06,32 Here's 911 01:02:06,33 --> 01:02:09,87 a that I was asked about Bitcoin and Berkeley the other day and I have to make 912 01:02:09,88 --> 01:02:15,45 a confession I don't I like to really investigate what I talk about 913 01:02:16,53 --> 01:02:23,13 before I answer and while I was writing this book and in sort of the basements of 914 01:02:23,14 --> 01:02:24,69 libraries around the country 915 01:02:25,32 --> 01:02:31,94 a bit coin was expanding and so as it was I really wasn't paying 916 01:02:31,95 --> 01:02:35,37 attention I have to admit I really was focused on other things one that there are 917 01:02:35,38 --> 01:02:40,77 two things about the coin that I can say from the my observations not my analysis 918 01:02:40,78 --> 01:02:44,67 on the outside which is that on the one hand it seems like it would be useful to 919 01:02:44,68 --> 01:02:45,47 have some kind of 920 01:02:45,48 --> 01:02:49,49 a currency that's more controlled by individuals and is more democratic and doesn't 921 01:02:49,50 --> 01:02:53,81 have the sort of concentration of bailouts and subsidies and speculative risk 922 01:02:53,82 --> 01:03:00,58 associated with it but on the other hand I don't know that that's you know I I I I 923 01:03:00,59 --> 01:03:07,21 fear anything that's not transparent. Enough for anyone who is using it and 924 01:03:07,22 --> 01:03:13,99 so it doesn't seem to me that the coin is really transparent enough and it 925 01:03:14,00 --> 01:03:17,32 gets funded by individuals from their bank accounts I mean there's whole that 926 01:03:17,33 --> 01:03:20,76 connection I don't know how that really plays out or how that will play out so 927 01:03:21,61 --> 01:03:22,10 that's not 928 01:03:22,11 --> 01:03:25,25 a really good statement decline but up but up but that's that's thing of be useful 929 01:03:25,26 --> 01:03:32,17 to have. A currency less mired in these types of political financial 930 01:03:32,18 --> 01:03:36,92 power alliances but in the same token I don't know that the coin would be something 931 01:03:36,93 --> 01:03:43,81 I would trust personally. Anyway. On that 932 01:03:43,82 --> 01:03:49,62 note though. I want to just thank you again and thank the town hall and third place 933 01:03:49,63 --> 01:03:54,54 books this is selling the book and just so you know the book is sold out thanks to 934 01:03:54,55 --> 01:04:00,20 people like you and spreading information around on Amazon in fact it won't be 935 01:04:00,21 --> 01:04:02,65 available through Amazon for a few weeks it's going into 936 01:04:02,66 --> 01:04:07,11 a second reprint So the two places you can get it if you wanted to go online it 937 01:04:07,12 --> 01:04:12,06 could be in an or any of the independent stores that have stocked the book 938 01:04:12,07 --> 01:04:16,48 including third place books so you might get the book much sooner and I'm not 939 01:04:16,49 --> 01:04:20,72 saying this to sell my I'm just saying it is sold out on Amazon right now so. I 940 01:04:20,73 --> 01:04:26,71 will leave it thank you for that thank. 941 01:04:49,09 --> 01:04:49,14 You.